Yet a third take-away from Vanguard's move is the rise of indexing techniques that promise to reduce several large, popular funds' trading costs. Investors should welcome the new methods.

In the next several months, more than half a trillion dollars of Vanguard mutual-fund and ETF assets will move to indexes created by the U.K.'s FTSE Group and the University of Chicago's Center for Research in Security Prices. Chief among the 22 affected funds is the
Vanguard Emerging MarketsVWO 0.8421052631578947%Vanguard FTSE Emerging Markets ETFU.S.: NYSE Arca38.32
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N/AMore quote details and news »VWOinYour ValueYour ChangeShort position
ETF (VWO), the top ETF asset-gatherer of the past five years, which will get a makeover as it switches to a FTSE index. In the biggest change, the fund's 16% South Korea weighting will disappear, removing stocks such as Samsung Electronics (005930.Korea) and Hyundai Motor (005380.Korea).

There is also a notable change for the popular and broad
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N/AMore quote details and news »VTIinYour ValueYour ChangeShort position
ETF (VTI). This fund will add more micro-cap and small-cap stocks to the thousands of shares it already tracks. Performance shouldn't see much of an impact in either case, although the road is paved for expense cuts, which can matter hugely for long-run performance.

Sipkin predicts BlackRock might not need to cut EEM fees as steeply in light of the Vanguard news, or even at all. Step back from the details and the take-away might be this: The more that Vanguard focuses on cost and small-time investors' needs, and iShares on trading and other institutional issues, the less the two companies need to beat each other up with price cuts and other enticements.

SPEAKING OF COMPETITION, there's another underappreciated dynamic of the Vanguard shift: new indexing practices. The University of Chicago's Center for Research in Security Prices, which has provided data to financial researchers for decades, uses a practice known as "packeting" to guide index funds' buying and selling of stocks. As a stock grows in size, the method allows the stock to be shared between two indexes -- large-cap and mid-cap, for instance -- which relieves index funds of the need to buy or sell an entire stockholding when that stock graduates from one designation to another. This should reduce the splash that a $10 billion or $20 billion ETF makes when it buys and sells chunks of stock on the open market.

The research center's indexes also use randomly selected days to determine the market-capitalization figures used to rank stocks, which serves to cut down on the information available to would-be arbitrageurs. Investors should applaud those changes, ignoring suggestions that they make the portfolio less transparent.

"There's no magic here," says Rodney Comegys, head of index analysis and ETF trading at Vanguard. "One of the goals of CRSP's indexes is to be objective and not opaque."